San Bernardino, a bankrupt city in California, will raise taxes and cut services, but never would it dare to reign in public employees’ pensions. Bullied by the California Public Employees’ Retirement System (CalPERS), the city will pay $13.5 million in back payments and fees. Not only must San Bernardino fulfill unreasonable commitments to current employees, CalPERS and unions insist it must pay extraordinarily inflated pensions to all future employees, despite having no money to do so. Cities do not exist to provide public sector jobs, but services to their citizens. Looking at the budget choices of San Bernardino and other strapped California cities such as Vallejo and Stockton, who would have guessed?
If you’re an aerospace contractor in California don’t worry about paying your taxes. The California state legislature voted in favor of providing $420 million in tax incentives to Lockheed Martin for them to locate production of a new stealth bomber at their facilities in the state. Apart from these incentives being incredibly unsound policy, multi-billion dollar companies like Lockheed Martin and Boeing hardly need government handouts at the expense of smaller firm who don’t have privilege of friends in high places.
“Narrow incentives such as these are not sound tax policy. They rarely succeed in their aims of “creating” jobs, and create major distortions as existing companies foot the full freight of the tax bill in order to provide incentives to other favored firms and new investments.”
Good intentions pave the path to wasted spending and bureaucracy. Aiming to improve tech-literacy and ease the burden of hauling physical books, Los Angeles Unified School District (LAUSD), the nation’s second largest district, spent $1 billion of taxpayer money to give every kid an iPad. Expectedly, the experiment was wrought with failure; teachers misunderstood usage schemes and students quickly overcame security filters. Instead of cutting its losses and regrouping, the LAUSD has pledged to spend up to $40 million more to give students laptops, allowing them to choose between six different options. LAUSD wagers that the options will allow schools and students to choose the device that fits best, but it’s an awfully expensive hope. The innovation of blended classrooms, which utilize both online learning and traditional teaching, may truly improve educational outcomes. Unfortunately, the LAUSD is not making that connection, but it will keep trying… and spending. From latimes.com:
In support of additional spending and laptop options, LAUSD school board member Monica Ratliff said, “The benefit of the new approach is clear. Why would we treat all our students — whether they are a first-grader or a high school freshman — as if they all had the same technology needs? They don’t…. To have a one-device-fits-all approach does not make sense.”
Los Angeles has announced a new plan for sanitation companies in the city. The city currently divides service between the Department of Sanitation which serves single-family homes or duplexes, and private trash haulers who serve apartment complexes and businesses. Under the new plan, private haulers will now have to bid for franchise licenses and pay the city to do so. As if it couldn’t get worse, the city will be split into 11 districts and each district served by a single company and their license lasts for 10 years. The changes could shut down about 40 different businesses. Yet it gets worse still; the new regulations allow the city to view the licensed businesses as city contractors and force a litany of union-favored rules on them. Apparently the anti-business types have no problem with monopolies when they are government enforced.
“As city contractors, trash companies will be required to comply with the city’s living wage ordinance and pay its employees at least $11.03 per hour if they also have health benefits, $12.28 if they do not. Under the city’s First Source Hiring Ordinance, trash companies will be required to inform the city’s Development Department Workforce Development System of any job openings, interview any applicants referred to them by the city, and explain their reasons if they decline to hire any of them.”
Public servants in California are doing the state worker shuffle, and regrettably, it’s not a new dance making its way through hip bureaucratic circles. It’s a way in which state departments can keep millions in excess funding earmarked for employee salaries. By law, when a state position goes unfilled for six months, the department loses this money. Repeatedly transferring employees (without a change in title or duties) has allowed these departments to keep millions in unspent funds. Departments then use this money towards operating costs such as rent, equipment, and (it’s probably just a coincidence) employee raises. From MyGovCost.org:
“[A]t least $80 million is in play here. All of that comes from taxpayers, who are getting a raw deal.”
The State of California’s budget has tens of billions of accounting mistakes according to an audit by the Bureau of State Audits. These mistakes have added up to almost $31 billion in discrepancies. That is higher than the GDP of Iceland and Jamaica combined. With such glaring errors in their budget, it is no wonder that California remains fiscally unstable.
“Sacramento State accounting professor John Corless agrees with auditors saying those glaring mistakes should have been caught by somebody. ‘Someone’s not using their equipment right, and they’re not using their heads,’ he said.”
The state bureau responsible for fair and effective tax administration in the state of California, vaguely named the Bureau of Equalization (BOE), has evidently sunk over $60 million in taxpayer funds for repairs to their headquarters in Sacramento, CA. Bestowed with the quaint title of the “Tower of Terror,” the twenty-year-old high rise has been afflicted with mold infestations, traces of toxic substances, ruptured water pipes, malfunctioning elevators, and falling exterior paneling. Unfortunately, conditions seem to be worsening, so the BOE may be expected to throw more taxpayer dollars at the perpetually-defective structure.
“The cost to fix everything is another $30 million and it would be very costly to move around some 2,000 employees during repairs. In 2007, the state bought the building for $80.7 million and the debt, currently $77 million, won’t be paid off until 2021.”
How long will the government pursue money it thinks belongs to it? Ask Gilbert Hyatt, who in 1970 invented a microprocessor computer chip which helped to spark the proliferation of computer technology. In 1990 he was awarded a patent for the processor and made a large profit as a result. Since then, California’s Franchise Tax Board has pursued him for $7.4 million in back taxes, which today has reached almost $55 million in fines and penalties. Hyatt was not even living in California when he received the money originally, but since he was before he received the patent, the state thinks they deserve a share.
“On Friday, Hyatt, now 76, filed a federal lawsuit accusing the state of violating his constitutional rights in pursuit of a sum that now tops $55 million as interest and penalties have accrued. He’s asking for an injunction forbidding the state from pursing its claim any further. After all these years and legal expenses, he just wants California to leave him alone already”
The Independent Institute points out that California’s high speed rail project is an example of bloated government:
As the report notes, last year California’s High-Speed Rail Authority nearly tripled its staff to 116 employees and payroll soared from $2.5 million to almost $7 million… The staff and payroll figures exclude “a variety of consultants,” who don’t work for a song.
The “bullet train” has yet to transport a single passenger at any speed. But the bullet train has already succeeded at bulking up government and giving politicians a new place to spend.
One school superintendent in California won’t be receiving any fan mail for a while, after local taxpayers learned of his exorbitant annual salary. The superintendent oversees only four schools and 6,637 students but makes $665,365 a year. His salary is completely ridiculous when compared to the superintendent of a nearby district who oversees 900 schools and 655,494 students, but makes $389,997 a year.
“In addition to the lucrative paycheck, the school board has also provided a sweetheart mortgage deal to help Fernandez buy his suburban home. This mortgage benefit – a $910,000 loan at just 2 percent interest – was especially helpful for Fernandez, given his financial troubles. Fernandez recently emerged from bankruptcy.”